Supreme Court upholds health care law; tax provisions remain

Washington National Tax Services

The U.S. Supreme Court today issued its decision on the "Patient Protection and Affordable Care Act" and the related Reconciliation Act of 2010 (in combination, the "ACA" or "the Act"). In a five to four decision, the Court ruled that the ACA's mandate for individuals to purchase health insurance is constitutional under the taxing power of Congress. The Court's ruling places certain limits on a provision of the ACA expanding Medicaid coverage.

The Court's decision leaves in place significant business and individual tax provisions. Congress in 2010 approved as part of the ACA several significant revenue-raising tax provisions. Some of these tax provisions have already taken effect, including provisions codifying the economic substance doctrine and imposing an annual assessment on pharmaceutical manufacturers. Others are set to take effect next year -- including a new Medicare Hospital Insurance ("HI") tax on higher-income taxpayers and a tax on medical device manufacturers -- or in 2014 and beyond.